Qantas union showdown is on

By
Matt O'Sullivan and James Massola

Feb. 28, 2014, 7:52 a.m.

Qantas chief executive Alan Joyce is on course for another showdown with the airline's heavily unionised workers after announcing the axing of 5000 jobs and embarking on a bid to freeze wages across the company.

Qantas union showdown is on

Qantas chief executive Alan Joyce is on course for another showdown with the airline's heavily unionised workers after announcing the axing of 5000 jobs and embarking on a bid to freeze wages across the company.

Mr Joyce will meet heavyweights from the union movement on Friday to thrash out the details of the job cuts – and the wages freeze for workers. Management is taking a wage cut or freeze in the wake of a $252 million loss in the six months to December.

"The current position is unsustainable," Mr Joyce said. "There are many Australian companies that have failed because they were not prepared to make the hard decisions. Qantas is not one of them."

Qantas' hopes of a financial helping hand from Canberra were also thrown into doubt after Prime Minister Tony Abbott signalled the government would take a hard line on guaranteeing the airline's debt.

"Why should the government do for one what it is not prepared to do for all, or what is not necessarily available for all?" Mr Abbott said.

The change of direction on the debt guarantee put Mr Abbott at odds with his Treasurer, Joe Hockey, who had previously said the government was moving towards providing the debt facility.

The opposition berated the government for inaction and demanded the guarantee be provided immediately.

Virgin Australia boss John Borghetti said if Canberra gave Qantas a debt guarantee, he would seek a similar pledge "within 24 hours".

The government wants to change the Qantas Sale Act in a way that would keep foreign ownership of the airline at 49 per cent but drop barriers that limit foreign airline ownership to 35 per cent and other foreign shareholders to 25 per cent.

Labor has insisted the overall limit remains at 49 per cent but has signalled it could compromise on the other caps.

Federal MP Clive Palmer, whose party may hold the balance of power in the Senate from July 1, has indicated he won't support law changes that would allow Qantas to be foreign-owned.

Mr Palmer said: ''There will be no amendments to the Qantas Sale Act that our senators will vote for.''

''I've discussed it with all of them and there’ll be no amendments to the act and that'll be it,'' Mr Palmer told the ABC on Friday.

But the Australian and International Pilots Association (AIPA) called on both major federal political parties to accept a compromise deal on the Qantas Sale Act.

''The current political debate over the Qantas Sale Act is unnecessarily absolutist,'' AIPA president Nathan Safe said in a statement on Friday.

The ACTU will spearhead talks about the job cuts with Qantas management in Sydney on Friday. Other major unions will also attend including the Australian and International Pilots Association and the Australian Services Union. The unions condemned the latest job cuts on Thursday.

Qantas will push 2000 staff out the door by June and wants the remainder to go within three years. While jobs will go from Jetstar, most cuts (including of pilots, engineers and caterers) will be from the premium Qantas business. Average salaries at Qantas are $100,000 a year, according to stockbroker CLSA.

Mr Joyce said he would not be contemplating wage rises or bonuses at the airline until it made money but conceded the complexity of achieving this given the company has about 54 enterprise agreements.

He sought to win support for his shake-up from the workforce, saying: "We believe that the employees in Qantas are aware of the challenges that Qantas faces."

But he will have a tough job to win them over given the response from union officials, and will want to avoid a repeat of the damaging dispute in 2011 that culminated in his grounding of the entire airline to break a deadlock over new enterprise agreements.

The Australian Services Union vowed to "fight for every job", while Transport Workers Union national secretary Tony Sheldon said the sackings were "like a tradesman selling his tools to pay a one-off bill".

ACTU secretary Dave Oliver said on Friday that he would seek a commitment from Qantas to share ''relevant information'' about the decisions that led to the job cuts at the meeting.

''I don't think it's proper that Alan Joyce stand up to the world and say that we've got to get $2 billion of savings and 5000 jobs,'' he told ABC radio.

''It's easy for him to start bandying about numbers, but what we're talking about is 5000 livelihoods'', adding that it was premature to talk about industrial action.

In a rare move, Qantas has already sought to bring forward to April or May negotiations with the pilots' union over a new wage deal. The current agreement is not due to expire until the end of the year.

The latest cuts will be the biggest cull of Qantas' staff since Mr Joyce took the reins in 2008, and will reduce the airline's workforce to about 27,000.

Before the latest plans for retrenchments, Mr Joyce had announced almost 4200 job cuts during his tenure.

As part of plans to strip out $2 billion in costs, Qantas will can orders for eight A380s, defer delivery of three 787 Dreamliners, and retire ageing Boeing 767s and 747 jumbos earlier than expected. In total, it will sell or defer more than 50 planes. It will also ditch flying between Perth and Singapore later this year after large losses.

Qantas will also shelve growth plans for Singaporean budget offshoot Jetstar Asia amid intense competition with other budget airlines in the region.

Australian and International Pilots Association president Nathan Safe said the government should be "twisting management's arm to be open and honest about where" the airline was heading.

"Otherwise, it is like supporting a plan to bulldoze half a house before the blueprints to rebuild have been drawn," he said.

The shake-up also failed to win over investors, who pushed Qantas shares down 9 per cent to $1.155. Investors believed Mr Joyce had not gone far enough to slash Qantas' high cost base.